MRS. LEELA S. CHANDA, MUMBAI V. INCOME TAX OFFICER, WARD1(1)(2), MUMBAI

ITA 2137/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1903 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-04-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 06-04-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANDEEP DAHIYA

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI. BEFORE SHRI R.V. EASWAR, SENIOR VICE-PRESIDENT AND SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER. I.T.A. NO. 2 137 & 2138/MUM/2009. ASSESSMENT YEARS : 2103-04 & 2 005-06. MRS. LEELA S. CHANDA, THE INCOME TAX OFFICER, 1 ST FLOOR, A WING,MANGALYA CHS LTD., VS. WARD 1(1)(2), OPP. ASHA KHETAN MEDICAL STORES, MUMBI. VIDYANIKETAN MARG, M.G. ROAD, GOREGAON (W), MUMBAI 400062. PAN ADRPC3920F APPELLANT RESPONDENT APPELLANT BY : NONE. RESPONDENT BY : SHRI SANDEEP DAHIYA. O R D E R PER J. SUDHAKAR REDDY, A.M. BOTH THESE APPEALS ARE FILED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2003-04 AND 2005-06 AND ARE DIRECT ED AGAINST THE SEPARATE ORDERS OF THE CIT(APPEALS)-XI, MUMBAI DATE D 05-12-2008 AND 19-12-2008 RESPECTIVELY. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE ISSUAL OF NOTICE BY RPAD. THERE IS NO PETITION SEEKING AN ADJ OURNMENT. ON AN EARLIER OCCASION WHEN THE NOTICES ARE ISSUED BY RPA D, THERE WAS NO RESPONSE FROM THE ASSESSEE. UNDER THESE CIRCUMSTANC ES, WE ARE OF THE CONSIDERED OPINION THAT WE SHOULD DISPOSE OF THESE CASES EXPARTE QUA THE ASSESSEE ON MERITS AFTER HEARING THE LEARNED DR. 2 3. FACTS OF THE CASE: THE ASSESSEE IS AN ART DIRECTOR AND ART CONTRACTO R. SHE IS PROPRIETOR OF M/S ARTZ. SHE UNDERTAKE CONTRACT FOR SET ERECTION FOR THE SHOOT OF ADVERTISEMENTS, SERIALS, TALK SHOWS AND FE ATURE FILMS. THE DISALLOWANCES AS WELL AS THE ADDITIONS FOR THE ASSE SSMENT YEAR 2003-04 THAT ARE IN QUESTION BEFORE US ARE ON ACCOUNT OF LO W WITHDRAWALS. THE AO HAD ADDED AN AMOUNT OF RS.50,000/- ON ADHOC BASIS O N THE GROUND THAT THE ASSESSEE HAS SHOWN PERSONAL WITHDRAWAL OF RS.41 ,145/- FOR THE ASSESSMENT YEAR 2003-04. THE ARGUMENT OF THE ASSESS EE BEFORE THE FIRST APPELLATE AUTHORITY WAS THAT HER HUSBAND HAD ALSO D RAWN AN AMOUNT OF RS.62,240/- FROM THE BANK. THERE IS A FURTHER ARGU MENT THAT THE ADHOC DISALLOWANCES MADE IN THE CLAIMS FOR TELEPHONE EXP ENSES, MOTOR CAR EXPENSES, MISCELLANEOUS EXPENSES AMOUNTING TO RS.68 ,876/-, SHOULD ALSO BE CONSIDERED AS PERSONAL DRAWINGS. 4. AFTER HEARING THE RIVAL CONTENTIONS, IN OUR CON SIDERED OPINION, THE ADDITION HAD TO BE UPHELD FOR THE REAS ON THAT, EVEN IF THE HUSBANDS WITHDRAWALS ARE TAKEN INTO ACCOUNT ALONG WITH THE DISALLOWANCES OF VARIOUS EXPENSES, THE DRAWINGS FOR PERSONAL PURPOSES APPEARS TO BE HIGHLY INADEQUATE. FOR THESE REASONS, WE DISMISS THE APPEAL FOR THE ASSESSMENT YEAR 2003-04. 5. COMING TO THE APPEAL FOR THE ASSESSMENT YEAR 20 05-06 WE FIND THAT GROUND NOS. 1 AND 2 RELATE TO THE FIRST D ISALLOWANCE ON ACCOUNT OF SECTION 40A(I) WHICH, ON PRINCIPLE, THE CIT(APPE ALS) DECIDED IN FAVOUR OF THE ASSESSEE BUT SUSTAINED THE ADHOC DISALLOWANC E AT 20%. 6. THE THIRD GROUND IS ON THE QUESTION OF DISALLOW ANCE OF PART OF THE CLAIM OF INTEREST EXPENDITURE. 3 7. FOURTH AND FIFTH GROUNDS ARE GENERAL IN NATURE. 8. AFTER HEARING THE RIVAL CONTENTIONS WE FIND THA T THE LEARNED CIT(APPEALS) HELD, THAT THE DISALLOWANCE CANNOT BE SUSTAINED UNDER THE PROVISIONS OF SECTION 40A(I). THIS ASPECT IS NOT CHALLENGED BY THE REVENUE. THE CIT(APPEALS) SUSTAINED THE DISALLOWANC E OF 20%, FOR THE REASON THAT THE ASSESSEE, HAS NOT PRODUCED ANY DETA ILS BEFORE THE AO. IN OUR CONSIDERED OPINION, NO FAULT CAN BE FOUND IN TH E VIEW TAKEN BY THE FIRST APPELLATE AUTHORITY. THE BURDEN IS ON THE ASS ESSEE TO PROVE THAT THE EXPENDITURE IS GENUINE AND INCURRED FOR THE PURPOSE OF BUSINESS. NON PRODUCTION OF DETAILS AND EVIDENCE TO THE SATISFACT ION OF THE AO JUSTIFIES THE DISALLOWANCE MADE. 9. IN THE RESULT, WE UPHOLD THE ORDER OF THE FIRST APPELLATE AUTHORITY AND DISMISS GROUND NO. 1 AND 2 OF THE ASS ESSEE 10. COMING TO GROUND NOS. 3 AND 4, THE ASSESSEE HA D CLAIMED AN EXPENDITURE OF RS.75,641/- AS INTEREST PAYABLE ON S ECURED LOANS. THE ASSESSEE HAD BORROWED RS.13,31,910/- AND HAS ADVANC ED AN AMOUNT OF RS.8,75,305/-. THE ASSESSEES CLAIM IS THAT THE MON EY BORROWED HAS NO NEXUS WITH THE LOANS GIVEN AND THAT THE SECURED LO ANS WERE UTILIZED FOR THE PURCHASE OF ASSETS FROM THE COMPANY. THIS FACTU AL STATEMENT IS NOT CONTRADICTED BY THE REVENUE. UNDER THESE FACTS AND CIRCUMSTANCES, WE APPLY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF S.A. BUILDERS REPORTED IN 288 ITR 1 AND HOLD THAT ONCE A LOAN IS TAKEN FOR THE PURPOSE OF BUSINESS, NO DISALLOWANCE CAN BE MADE U/ S 36(1)(III) 11. IN THE RESULT, GROUND NO. 3 OF THE ASSESSEE I S ALLOWED. 4 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2003-04 IS DISMISSED AND FOR ASSESSMENT YEAR 2005-0 6 IS ALLOWED IN PART. ORDER PRONOUNCED ON THIS 30 TH DAY OF APRIL, 2010. SD/- SD/- (R.V. EASWAR) (J. SUDHAKAR REDDY) SENIOR VICE-PRESIDENT. ACCOUNTANT MEMBER. MUMBAI, DATED : 30 TH APRIL, 2010. WAKODE COPY FORWARDED TO : 1. APPELLANT. 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, A-BENCH. (TRUE COPY) BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI BENCHES, MUMBAI.